Reform needed when there are too many GLCs and GLICs
Wednesday, March 13th, 2019
at , Money | News

While the govt needs agencies to drive certain policies, there must be a clear line drawn to how far they will go

By LYDIA NATHAN / Pic By MUHD AMIN NAHARUL

Malaysia needs to restructure government-linked companies (GLCs) and government-linked investment companies (GLICs), especially due to the sheer number of such organisations.

The Edge Media Group CEO Datuk Ho Kay Tat said a debate on whether there is a need for many GLCs has intensified following recent issues related to certain entities.

He said there are about 200 GLCs and four main GLICs today which are Khazanah Nasional Bhd, the Employees Provident Fund, Permodalan Nasional Bhd and the Armed Forces Fund Board.

He said the existing framework was the result of the Asian financial crisis in 1998 and was used to rescue the corporate sector by acquiring assets like in the case of United Engineers Malaysia Bhd (UEM Group Bhd).

“Today, some are totally unnecessary. One of the main issues we have faced is the lack of transparency, but I don’t think we actually need that many,” he said during a panel discussion at the Asian Strategy and Leadership Institute’s Malaysian Strategic Financial Outlook Forum in Petaling Jaya yesterday.

He said while the country needs agencies for the government to drive certain policies, there must be a clear line drawn to how far they will go.

“Let’s say there are that many and they deliver without stealing or wasting money, then, it will be tolerable. But let’s look at some of the debts these companies have,” Ho said.

The Malaysian Institute of Corporate Governance deputy president David Berry (picture) said some policies are formed because of a particular experience.

“All developing countries want to accelerate the programme, but in the past, we saw, rather than wait for the private sector, they’ve taken government funds and forced development,” he said.

Berry said legislation needs to be revisited with emphasis on transparency and openness.

“It needs to be more open and more transparent. It’s good that the country is building government structures, but it needs to be well understood and allows for external examination,” he said.

PLUS Malaysia Bhd chairman Tan Sri Mohd Sheriff Mohd Kassim said people who run the GLCs and GLICs are highly linked to politicians, and only the government can change that.

“On the state level, it has worked for most and has attracted enough foreign investment, which is a good thing,” he said.

But Ho said, on a state level, it is not necessary to shut the door on politicians as it should be based on quality and not their background.

“If they have good credibility and can contribute to a company, then why not?” he said, adding that shareholders also have every right to make recommendations.

Meanwhile, Rembau MP Khairy Jamaluddin questioned the need of oil carrier Petroliam Nasional Bhd (Petronas) to pay RM54 billion in special dividends to the government this year.

He said about RM15 billion out of the RM19.5 billion outstanding Goods and Services Tax refunds have not been verified.

“We were told that the government requested for the special dividends from Petronas, but according to the Auditor-General’s report, the bulk of the claims have yet to be verified,” he said.

The matter, he said, is currently being probed by the Public Accounts Committee.